TransCanada Begins Exit from Midstream
TransCanada PipeLines has taken the first steps in a bold plan
to divest $3 billion in assets in its Canadian midstream,
international and refined products transportation businesses. The
company sold subsidiary NovaGas Canada LP's Provost gas plant and
gathering system to a subsidiary of Midcoast Energy Resources Inc.
last week for an undisclosed sum and completed the sale of its Pesh
Creek processing complex and East Australia pipeline system earlier
this month. The total value of the two Canadian processing plant
transactions comes to about $42 million.
TransCanada intends to continue unloading midstream and
international assets as well as the Express Pipeline operation and
its Cancarb carbon thermal black manufacturing business in an
attempt to gain financial flexibility and refocus on the core
Canadian gas transportation business. The divestitures are expected
to be near completion by the end of the year. The company booked a
$700 million net loss during the fourth quarter of last year for
all of the discontinued operations being sold.
The first phase of its Canadian midstream divestitures is
expected to be completed this month with the sale of the Gordondale
and Caribou plants. Next month the company will start phase II
which will include four other gathering and processing assets,
including the Zama Lake, East Crossfield, Mosquito/Parkland and
Clearville plants and related facilities. The last phase of the
G&P assets sales will begin in May. It's liquids extraction
business will be sold as one package, and it may take through the
end of the year to complete the sale, a spokesman said.
Although it is not putting price tags on assets, the bulk of the
$3 billion proceeds will come from International operations, which
are concentrated in northern Europe, East Asia and Latin America.
Canadian midstream assets, including gathering and processing and
gas liquids and extraction, will be next on the list in terms of
greatest value. In total, one-third of its 4,400-person workforce
will be affected.
In contrast to TransCanada, Midcoast is just getting started in
Canadian Midstream, and the Provost assets make a good addition to
the other Alberta systems the company bought recently. Provost
includes 80 miles of gas gathering pipeline and a 15 MMcf/d sour
gas processing plant and sour gas injection well. The facilities
are located in east-central Alberta and include the only sour gas
gathering and processing system in the area. The system is
connected to 21 oil batteries and gathers primarily associated sour
gas production from 900 wells in the Provost area.
"The purchase of the Provost system adds another attractive
asset to our rapidly growing base of operations in Canada," said
Midcoast Canada President Jim Wright. "Along with the previously
announced purchase of the Manyberries system and our acquisition
last year of the Calmar system, Midcoast will own nearly 200 miles
of crude oil and natural gas pipeline and two processing facilities
with a combined capacity of 45 MMcf/day. We remain very excited by
the prospects we see for future growth in Canada and are continuing
to aggressively pursue these opportunities."
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